Council advised not to join home plan

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Nelson City Council will consider whether to join a government-led scheme set up to help homeowners fix leaky homes, on staff advice there is "no financial upside" for the council, and it could expose it to greater costs.

Council staff have recommended in a report to councillors, to be discussed at a committee meeting tomorrow, that it does not sign up to the Leaky Homes Financial Assistance Package, but that it should reassess the option of joining after a government review of the scheme in 2014.

The report said there were three active claims in Nelson city, but because they were for homes where consents were signed off by private certifiers, the council was not liable for any costs. Currently, there are no claims against the council.

The Government introduced the Financial Assistance Package (FAP) to help get more homes fixed faster. The Department of Building and Housing has been assessing claims and helping homeowners settle disputes since 2006. A recent review found not as many homes were getting repaired as intended when the Weathertight Homes Tribunal was established.

Under the FAP, qualifying homeowners share the agreed actual repair cost with the Government and their local council, if it approved the original work.

Since 2003 the city council has paid out $122,248 across seven claims totalling $545,239 for work to repair leaky homes in Nelson city. The biggest claim for one property was $204,720 in December 2007. The council's share was $31,758 which it paid in June last year.

The council budgets $54,000 a year for leaky building issues, plus staff time.

From 1992 to early 2005 a "substantial number of building consents" were issued and inspected by private certifiers.

Nelson city has three active claims, according to the Department of Building and Housing website, but the council would not be liable for costs because the consents were handled by a private certifier.

The report to the audit, risk and finance committee said that problems related to leaky homes arose from a series of building and system failures between the mid 1990s to the mid 2000s. Some homes built then were not fully weathertight and suffered "significant structural issues" due to water getting into the building frame.

The courts found councils partly liable because they carried out building consent approval and inspections on some of these properties.

Council staff said advantages of being in the FAP would be that the council would have certainty over the percentage of the contribution of repair costs it would have to pay, although the total amount that might be needed to fix a leaky home was not determined by the council.

Council money would go into fixing homes rather than litigation expenses, which historically have cost the council around $20,000 to $25,000 each claim.

If the council joined the FAP, once it had made a contribution to a claim it would be protected by legislation from further claims relating to events which caused the claim, but additional failures that could happen as a result of remedial work could result in further claims against the council, which was common in metropolitan areas.

City council staff said councils already signed up to the scheme had seen a rise in claims, especially from homeowners unwilling to pursue a claim through drawn-out litigation.

Disadvantages of being in the FAP were that the final cost for repairing leaky homes was unknown and out of the council's control. The council's building unit could not charge for processing or inspecting consents for any remedial work, and would incur additional expense through having to provide consent and remedial assessment, administration, and inspection services.